Peter Orszag on CNBC’s Squawk Box
On January 16, Lazard Chief Executive Officer Peter Orszag appeared on CNBC’s “Squawk Box” from the World Economic Forum in Davos, Switzerland. During the segment, Peter was asked for his analysis on the previous evening’s results in the 2024 Republican Iowa caucuses.
“It is going to be a close election, every election in the U.S. is close, but the tip may be the economy. The economy is seen as being much worse than it is, but that may change over the next several quarters. What’s happening here is three things. One: There’s a lag, so it takes a while before the perception of the economy catches up to the actual economy. Two: There is clearly a deep partisan split on this issue and Republicans think the economy is in much worse shape than Democrats, and as the country polarizes that gets worse. And the third thing is that given GDP, given inflation, and given the stock market, the news sentiment is much more negative than it should be,” Peter explained.
Later in the segment, the conversation turned to U.S. monetary policy and widespread expectations that interest rate cuts from the Federal Reserve will commence during the first half of 2024.
“I don’t think the market expectation that the Fed is going to start cutting rates anytime soon – at least until very late this year – is likely to play out. Just look at what [Federal Reserve Chair] Jay Powell is saying. [The Fed] will be very concerned about cutting too aggressively going into an election – they’ll claim they’re not, but they will be. Finally, what is the impetus for cutting rates when you want to make sure that you’ve really stamped out inflation and that the economy is not in recession?” Peter asked.
He concluded by reiterating his previously stated opinion that the overall market for M&A will improve during 2024.
“For M&A, high rates are a negative, but stable rates are a positive, so high and stable is not so bad. I think the reason the M&A market has started to turn is exactly that - that people have seen the pivot from the Fed,” Peter observed.